ABC inventory classification

Definition: is an inventory optimization and control system, which implies dividing all of the items into three categories (A, B, and C) according to their value and other important criteria like turnover or revenue generation. Characteristically, the A segment always defines the most valuable items of the inventory, and the C includes the least valuable ones. The ABC inventory classification method is very effective when it comes to drawing the staff’s attention (mostly managers’) to the items that are less in quantity but more in quality. This classification technique serves to help company’s employees keep track of the inventory and to control the costs more efficiently.

In a Sentence:

If we want to be able to manage all of the inventory items effectively, we should probably apply the ABC inventory classification.

The ABC inventory classification allows us to pay more attention to the more important and the high-value items.